Welfare reform objectives ‘at risk’ – warns report

A new report on welfare reform shows that the challenges facing both councils and households affected risk undermining the objectives of the Government’s welfare changes.

The report, “The local impacts of welfare reform”, published by the Learning and Work Institute and commissioned by the Local Government Association, brings together a wide range of research to explore the impacts on people, communities and services.

It looks at how households are responding to the reforms, and highlights how some households, many of whom are in work, are struggling to increase their income from employment or reduce their outgoings sufficiently to manage reductions in benefits income.

The report makes a series of observations and recommendations for improving how the welfare changes are implemented and how councils are able to support those affected.

It identifies the freeze to the local housing allowance rate in the private sector and the dilution of work incentives in Universal Credit as key issues.

It also identifies the problems caused by a chronic shortage of affordable accommodation in many parts of the country.

The report says that the impacts of welfare reform vary, presenting different challenges for councils in different parts of the country.

In older industrial areas and seaside towns where there are high levels of unemployment, poorer health outcomes and low wages councils face particular challenges supporting those who are struggling to find and progress in work.

London boroughs and councils in other areas where rents are exceptionally high, are dealing with higher levels of homelessness and arrears. It is both expensive for councils and detrimental for households to have such high numbers in temporary accommodation.

Certain groups have been found to be disproportionately affected, in particular disabled people and those with health conditions; households with dependent children, in particular lone parents and those with large families.

The report says that councils are increasingly concerned about the removal of funding for the local safety net to support the most vulnerable claimants.

Analysis shows that seven million low-income households will see their incomes fall by on average £31 per week by 2020 in cash terms, as a consequence of the welfare changes unless councils, job centres and other local partners can do more, with support from government, to enable them to increase their income from employment or reduce the cost of housing. This impact will increase significantly after inflation, with the freeze in benefits leaving households a further £33 per week worse off on average between 2017 and 2020.

The report says councils’ ability to support those affected by the reforms have been made all the more challenging having taken place against a backdrop of budget reductions.

Cllr Claire Kober, Chair of the LGA’s Resources Board, said:

“The welfare reforms have had a significant impact on households, communities and local services since they began to be introduced in earnest in 2012.

“While the reforms have led to some sustainable reductions in spending, and some modest improvements in employment outcomes, many are struggling to cope, and the resulting pressures on council budgets and services are presenting real challenges.

“Councils would like to be able to do more, in partnership with government, to support low income households to increase their income from employment and access genuinely suitable and affordable housing.

“The LGA has long argued for a more devolved and integrated approach to employment and skills, and for closer partnership working between job centres and councils.

“It is not right that councils are having to house many of those who have been unable to cope with the reductions in housing benefit in expensive, unsatisfactory temporary accommodation because of the lack of affordable housing.

“It is also important that we focus on financial inclusion. We support the report’s recommendation that government urgently needs to review Discretionary Housing Payment and other local welfare funding to ensure that we can offer help to households at the earliest opportunity and work with partners to improve access to financial services and affordable credit.

“More needs to be done to deliver the original aims of the welfare reforms, to make the system more affordable, reduce dependency and protect the most vulnerable.”